Congress Still Wrestling With Debt Treasury May Have To Try Some More Creative Financing

November 13, 1985|By Chris Reidy, Sentinel Washington Bureau

WASHINGTON — With the Treasury Department scheduled to run out of cash at midnight Thursday, Congress continued its efforts Tuesday to reach a compromise on a bill that would allow the government to borrow more money.

The bill has been stalled by amendments to force the government to balance its budget by 1991.

As the debate went into its second month, support seemed to be growing for a plan to let the Treasury borrow more money temporarily, postponing a possible government shutdown until President Reagan returns from the Geneva summit.

Lawmakers proposed a temporary measure to Reagan at a White House meeting, and said he indicated neither support nor opposition to the plan.

The budget-balancing amendments would cut defense spending and could effectively end Reagan's military buildup, delivering a defeat for the president on the eve of the summit, White House aides said.

Because it might weaken the U.S. negotiating position, these aides suggest that a reappraisal of Reagan's endorsement of the balanced-budget legislation may be needed.

Meanwhile, House and Senate negotiatiors convened briefly in public as part of an attempt to reach a compromise on their substantially different versions of balanced-budget legislation.

Major differences include the treatment of poverty programs, the constitutionality of the legislation and the timetable for reducing the budget deficit until it is eliminated.

The balanced-budget legislation is attached to a bill to give the government $250 billion in borrowing authority, an amount sufficient to honor its financial obligations for one fiscal year.

Twice before, the Treasury Department has averted default by innovative financing and by paying bills with interest from the Social Security trust fund.

Normally the interest is reinvested.

Now the Treasury Department claims its has nearly exhausted its credit and, unless Congress acts, it will have to make an unprecedented default on $25 billion worth of obligations due Friday.

To give the Treasury and Reagan some breathing space, a stopgap measure may be adopted that would tide the government over until early or middle December. Some lawmakers suggested that Reagan would have to make a formal request before Congress would enact the stopgap measure.